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Russia Faces Past Year’s Inflation
The inflation in Russia reached 1 percent in the first nine days of 2007, the RF Finance Ministry said, corresponding to 12.5 percent in annual terms.
Yesterday, Finance Minister Alexey Kudrin forwarded a document to Prime Minister Mikhail Fradkov specifying additional actions to curtail the money supply growth in 2007. According to Finance Ministry, the inflation in Russia is as dangerously high as it was in 2006 with consumer prices up 1 percent in the first nine days of this year vs. the 1.1-percent growth posted past year.
Finance Ministry forecasts the prices to surge 2.2 percent in January, which is slightly less than past year's 2.4 percent. But the 2007 annual target sets forth inflation of no more than 7 percent to 8 percent, while the 2006 inflation was to be contained at 9 percent.
As a way out, Finance Ministry suggests confirming that the spending of this year’s budget won’t go up in the end. This proposal is not very popular in the White House, similar to the second idea of Kudrin’s subordinates, by the way. Finance Ministry presses for recommending to Gazprom to transfer the excess profit to redeem previous indebtedness and restrict foreign borrowing of the gas monopoly.
The true hopes of Finance Ministry root in the abnormally warm winter, one of the document’s masterminds said on condition of anonymity. The expected aftereffect is the drop in the average Urals price from the estimated $61/bbl to roughly $51/bbl. But investors may step in to crash the ministry’s expectations. If this happens, the capital inflow is likely to offset the shortage of export revenues.
www.kommersant.com
All the Article in Russian as of Jan. 16, 2007
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